How many charities produce a yearly (or longer) plan? According to the Charity Commission, the answer is about half. In a way, this is an impressive finding. It is by no means obvious that a survey of commercial organisations would reveal a similar commitment to looking ahead. Yet it still means that 50 per cent of charities have no such strategy document. Is this a cause for concern?

The Commission revealed the figure by way of background to its recent RSG publication - Milestones: managing key events in the life of a charity. Although the charity regulators produce a large number of documents, this one has caught the attention of the sector like few others.

The thinking behind it is that a charity's history tends to be punctuated by certain key events - milestones, in other words - and that the way an organisation responds to these is crucial to its future. What might these milestones be? There are a number of possibilities, but some of the most frequent are:

• A basic change of direction
• Changes in funding arrangements, such as receiving a substantial grant, entering into a contract to provide services or establishing a trading subsidiary
• Acquiring property
• Changes in organisational structure

Few would doubt that these can indeed be pivotal events. But how can charities ensure that they are able to cope with the new demands that such milestones place upon them? It is all very well to say that an organisation should have a strategic plan, but how should the plan be compiled, and how can it allow for events, which, by their very nature, are difficult to foresee?

Before attempting to answer that question, it may be helpful to consider the daily reality of charity management. One of the problems preventing trustees and staff from planning ahead is the short term funding cycle that is typical of the sector, coupled with the fact that funds are often given for a specific purpose. Many charities are fully engaged in an annual round of rebidding simply to maintain their revenue stream. In such a situation it is very difficult to look beyond immediate needs.

Yet it is important, vital in fact, that charities do so. It is impossible to believe that pressures on funding will ever change, or that it will become easy to secure long term cash commitments. A charity that is completely preoccupied with short term requirements, however understandable this may be, could be ignoring its long term viability.

The five point approach
One of the difficulties inherent in planning is that the subject is so vast and ill-defined. No charity can plan for every eventuality, just as none has limitless resources and time to devote to the task. But we often find that it is helpful to impose a clear structure on the exercise, so that thoughts can be focused where they are likely to be most productive. The following five-step approach is only one of many possible methods, but it has the virtue of clarity and manageability.

1. Documenting the aims: This is the essential starting point. Of course charities will know their aspirations and objectives. But it can be revealing to document them clearly, and gain the support of all involved.

2. Finding the facts: A fact-finding exercise should involve a thorough assessment of the financial aspects of the charity's operations. The review should include internal and external factors that could have an impact in the short, medium and long term. It should also cover the charity's strengths and weaknesses from a financial perspective.

3. Where are we headed: At this stage, the planners identify the way in which the charity will develop, or at any rate where they wish it to develop.

4. How will we get there: Having set aims for the future, the plan should define the resources, financial and otherwise, that will make them possible. This is the heart of the exercise. The pian should consider whether or not the ambitions are realistic and achievable. If they are not, perhaps the ambitions should be scaled down. In any organisation a financial crisis can develop with alarming speed. By thoroughly considering the various possibilities at this stage, and by asking the key 'what if' questions, the likelihood of a crisis is considerably reduced.

5. Keep it fresh: Many organisations, and not just charities, are inclined to view the plan as complete when the last sentence is written. But a plan is never complete. It is, or certainly should be, a dynamic document that is constantly reviewed and updated. If there is a secret to good planning, this is it.

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